Listen up New York snowbirds. At long last, New York will consider a proposal to significantly increase its state estate tax exemption from the current $1 million level to match the federal estate tax exemption. This would close the ever expanding, multimillion dollar gap between the New York exemption and the federal exemption since the federal exemption is now adjusted annually for inflation, with the 2013 federal exemption sitting at $5.25 million and increasing to $5.34 million in 2014. In addition, the proposal would lower the top New York estate tax rate from 16% down to 10%.
The proposal is part of a December report issued by the New York State Tax Relief Commission and is expected to become part of New York Governor Andrew Cuomo's executive budget that will be released in January 2014. The increase in the exemption and reduction in the tax rate would not happen overnight but would be phased in over a period of several years.
Such a significant change in New York's estate tax structure would surely put a dent in the migration of New York retirees to an estate tax free state like Florida, but maybe not as much as Governor Cuomo would like since Florida also lacks an individual state income tax. It would, however, put New York on even par with Delaware, which bases its state estate tax exemption on the federal exemption (although Delaware does not collect a state sales tax), and make New York attractive when compared with other northeastern states like New Jersey, which currently has the lowest state estate tax exemption of $675,000 and also collects a state inheritance tax; Rhode Island, which has a 2013 state estate exemption of $910,725 that is adjusted annually for inflation but will only increase to $921,655 in 2014; Maryland and Massachusetts, which each have a state estate tax exemption of $1 million (and Maryland also collects a state inheritance tax); Connecticut and Maine, which each have a state estate tax exemption of $2 million (and Connecticut has a state gift tax to boot); and Vermont, which has a state estate tax exemption of $2.75 million. But then again, Florida does have much nicer weather right now than any of these states, so that's another plus in Florida's column in my book.
- Big Changes To New York's Estate Tax On Agenda For 2014
- Overview of New York Estate Tax Laws
- Overview of Current Federal Estate Tax Laws
- Does Florida Collect an Estate Tax?
- Top 5 Reasons to Become a Florida Resident
- How to Become a Florida Resident, Officially
- How to Reduce or Even Eliminate Your Estate Tax Bill